KENNETH D. GRAHAM, 29, of Marysville, Washington, pleaded guilty today in U.S. District Court in Seattle to three felony charges in connection with a scheme to burglarize pharmacies within a four State area and to sell prescription narcotics stolen from the pharmacies for thousands of dollars. GRAHAM pleaded guilty to Conspiring With Others to Burglarize Pharmacies (Count 1), Burglarizing Pharmacies (Count 2), and Distribution of Oxycodone (Count 3) over a Two Year Period in Snohomish County and elsewhere.

According to court documents, GRAHAM admitted joining with several other Snohomish County men in an unlawful agreement to burglarize pharmacies within a four State area, including Washington, Idaho, Oregon, and California. The conspiracy existed over a two-year period and numerous pharmacies were burglarized by the group during this period. It is noted that during the same period of time, nighttime pharmacy burglaries increased in the State of Washington exponentially, and the State of Washington led the country in the number of pharmacy burglaries.

GRAHAM acknowledged participating in at least seven specific burglaries, including:

1. April 24, 2004, burglary, of Medical Clinic Pharmacy, 203 E. Elm Street, Caldwell, Idaho, during which controlled substances with a wholesale value of $3,231 were taken.

2. December 2, 2004, burglary of Lim’s Pharmacy, Shasta Community Health Center, Redding, California, during which controlled substances with a wholesale value of $40,000 were taken.

3. January 27, 2005, burglary of Central Drugs, 26201 Barnett Road, Medford, Oregon, during which controlled substances with a wholesale value of $2,400 were taken.

4. October 10, 2005, burglary of Rite-Aid Pharmacy, 18906 State Route 2, Monroe, Washington, during which controlled substances with a wholesale value of $19,071 were taken.

5. January 7, 2006, burglary of Rite-Aid Pharmacy, 655 Russell Boulevard, Davis, California, during which controlled substances with a wholesale value of $48,000 were taken.

6. May 1, 2006, burglary of Sutherlin Drugs, 113 E. Central Avenue, Sutherlin, Oregon, during which controlled substances with a wholesale value of $7,543 were taken.

7. July 13, 2006, burglary of Rite-Aid Pharmacy, 1329 Lee Boulevard, Richland, Washington, during which controlled substances with a wholesale value of $13,520 were taken.

The burglaries were committed in common fashion, during the late evening/early
morning hours, when the pharmacy was closed for business. Typically, one of the co-conspirators would cut the telephone lines leading to the pharmacy to disable the remote alarm. One or more burglars would then break into the pharmacy and locate the stocks of controlled substances, while another co-conspirator acted as a lookout outside. The co-conspirators would remain in touch with one another during the burglary via cellular phones. Drugs regularly removed from the pharmacies included the pharmacy’s inventory of pills, injectables, patches, and medications, containing oxycodone, hydrocodone, methadone, morphine, meperidine, fentanyl, and amphetamines, among other Schedule II and III controlled substances. Graham’s role during these burglaries, included that of cutting the telephone lines, breaking into the pharmacy, locating and removing drugs, and distributing these drugs to others, all of which he did in return for the money earned through this unlawful conduct.

The drugs were distributed to a number of individuals through an established network in Snohomish County.

Other Snohomish County individuals who have already pleaded guilty in United States District Court to committing pharmacy burglaries in furtherance of this scheme are Michael Hinkle, 39, Ivan Stoutenburg, 31, Jeremy Swanson, 30 , and James Phillips, 24 – all of whom are awaiting sentencing. Those who have pleaded guilty to acting as distributors for the enterprise include Lyle Woods, 32, Jennifer Hinkle, 34, and Todd Downes, 27. The investigation is continuing and charges against additional participants in this criminal network are anticipated.

Selling the stolen drugs can net an illicit profit of $100,000 to $200,000 per burglary. This is due to the extreme premium for which these drugs sell in an illicit market, well in excess of the wholesale cost to the pharmacy of the drugs. By way of example, Oxycodone typically has a wholesale cost to the pharmacy of approximately ten cents per milligram of oxycodone contained within a pill, while Oxycodone typically resells at a premium of one dollar per milligram of oxycodone contained with a pill. Thus, a 15 mg pill, worth approximately $1.50 wholesale to the pharmacy, will resell for $15.00 per pill, and an 80 mg pill (wholesale value $8 per pill) will resell for $80.00 per pill. Thousands of such pills were removed during the pharmacy break-ins. Other types of stolen medications, including Vicoden (containing hydrocodone), Percocet (containing oxycodone), morphine, and amphetamines, such as Adderal and Ritalin, command similar premiums in an illicit market for such drugs. These drugs are consumed by addicts and others, posing harm to themselves and society in general. A recent 2006 Washington State study cites the escalating number of overdoses resulting in death from the unrestricted use of pharmaceutical controlled substances, such as oxycodone, hydrocodone, and morphine.

Pharmacy Burglary is a federal crime punishable by up to twenty years in prison and a $250,000 fine. Distribution of such controlled substances is punishable by up to twenty years in prison and a $1,000,000 fine.

As part of his plea agreement, GRAHAM agreed to pay restitution to each pharmacy for the physical damage done during the burglary and for the value of the drugs taken.

GRAHAM is scheduled to be sentenced by Chief U.S. District Judge Robert S. Lasnik on May 18, 2007.

This was an Organized Crime and Drug Enforcement Task Force (OCDETF) investigation, providing supplemental federal funding to the federal and state agencies involved. The case was investigated by the Drug Enforcement Administration (DEA), Northwest High Intensity Drug Trafficking Area (NW HIDTA), the Marysville, Washington Police Department, the Redding, California Police Department, Sutherlin, Oregon Police Department, Richland, Washington Police Department, and Monroe, Washington Police Department.

The case is being prosecuted by Assistant United States Attorney Ronald J. Friedman.

For additional information please contact Emily Langlie, Public Affairs Officer for the United States Attorney’s Office, at (206) 553-4110.

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